Focus On...Stonehaven Equity Release Schemes

Many retirees today are looking towards releasing equity from their property in order to help provide an improved standard of living. However, many over 55’s are dissuaded from taking equity release due to compounding interest & would rather control the balance by making some contribution towards the interest.

Current issues finding mortgages in retirement

We are now officially in the post credit crunch era. Mortgage lenders are experiencing the fallout from poor mortgage books and the wrath of the Financial Conduct Authority. However there is another loser - the retirement mortgage borrower.

There are regular case studies of how lenders are tightening their mortgage criteria for people at, or actually in their retirement years. But why should this age group be particularly penalised when retirees provide the best form of financial stability with a fixed, inflation proofed income and usually a good credit record?

What steps can be taken to overcome the obstacles that mainstream mortgage lenders are laying down, seemingly preventing people in retirement obtaining an interest only or capital & repayment mortgage? Here we look at how one company – Stonehaven are helping people over the age of 55 to fulfil their retirement aspirations.

Stonehaven’s Retirement Mortgage Solutions

Given the difficulties that current persist with obtaining a mortgage into retirement there are still a number of options available, mainly from an equity release provider called Stonehaven. Stonehaven have now been offering innovative equity release schemes since 2006, particularly where homeowners have been able to manage their mortgage balance.

There are three formats that Stonehaven provide their lifetime mortgages under: -

1. Interest Only Lifetime Mortgage Plans – this series of four tiered loan-to-value plans with escalating interest rates dependent upon the loan amount taken. The flag ship product is the Stonehaven Interest Select Lite which has the lowest interest rate of 5.94% (6.35% representative APR). Paying the interest only on a monthly basis will maintain a level mortgage balance throughout and therefore protect the final inheritance when the property is eventually sold. The Stonehaven Interest Select Plans now fall under the remit of MMR (Mortgage Market Review) which means that Stonehaven now insist on evidencing proof of income in order to accept any application.

2. Voluntary Repayment Plans – two lifetime mortgage plans that allow 10% voluntary repayments each year with no penalty. Payments can commence anytime from inception, whereby the homeowner can elect whether to make ad-hoc payments back to Stonehaven. This could be to partially cover the interest, repay all the interest only or using the full 10% allowance. The big advantage of the Stonehaven Voluntary Select Lite plan is that NO proof of income is necessary to support any level of borrowing on their two schemes. Effectively they are non-verification aka self-certification mortgages where subject to maximum lending limits based on age & property value the applicant can choose without income checks how much they can borrow.

3. Roll-up Lifetime Mortgages – Stonehaven offer the standard type of equity release scheme where no repayments are made, thus resulting in the compounding of interest & an increasing equity release balance. This is suitable for those looking at leaving little inheritance, or simply cannot afford to contribute towards the interest charged by Stonehaven. The Stonehaven Lump Sum product range are tiered dependent on the loan size required and interest rates are geared accordingly from 5.89% (6.40% representative APR)

Why are Pensioner Mortgages Still Necessary?

There are many reasons to look to Stonehaven Interest Select Options which encompass the interest only lifetime mortgage & voluntary repayment mortgage range to meet the financial challenges of our current times. These flexible retirement mortgages are becoming useful home equity plans for those over age 55, as these specialist pensioner mortgages are providing solutions that are starting to arise due to mainstream mortgage lending changes.

Many people who are looking to consolidate debts and repay mortgages where they have no or little form of repayment. This could be due to a change in circumstances, poor financial planning or lack of discipline in taking the necessary steps to repay the final mortgage balance. Not only that, but we are experiencing interest only mortgage lenders reigning in their mortgages at retirement age where lenders would previously have extended the term further.

Retirees still have mortgage needs. There are people looking to move house in retirement and therefore may need to borrow additional funds to bridge any monetary shortfalls. People look toward the alternatives to roll-up equity release schemes, especially where a good disposable income can be evidenced in order to support repayment options. Additionally, there are many projects such as home improvements where cash is needed to support such expenditures. A mortgage is the common solution, but one that has become increasing difficult to obtain into retirement.

Advantages of the Stonehaven Repayment Option Plans

All Stonehaven equity release plans have a fixed interest rate for life which means that affordability is known for the duration of the plan. With interest rates on repayment plans starting from 5.94%, this represents a low mortgage rate to fix at for the rest of one’s life. Let’s look at the advantages of both the Interest Select & Voluntary Repayment Plans: -

Stonehaven Voluntary Select Plans

Payments can be made immediately, with unlimited frequency with a minimum of £50 and maximum of 10%pa

Contributions can be made by monthly standing, cheque or online banking

Whether to repay or not, is the homeowners decision

Loan-to-values start from 11% rising upto 44%

No proof of income is required in order to support the mortgage

Two free further advances following initial withdrawal

Borrowings are based on age, property value & income levels

The balance can either be maintained on a level basis by repayments of interest only

The whole mortgage can be repaid over 16-17 years should the full 10% repayment be made

Stonehaven Summary

It is important to discuss what is right for you with a qualified independent equity release adviser, who can assess your requirements and have the ability to source the whole of the equity release marketplace to find the best equity release plan for you. Making the correct recommendation has lasting implications on your estate and affects your final inheritance.

Stonehaven equity release are regulated by the Financial Conduct Authority and registered with the Equity Release Council which means all its equity release schemes meet the standards laid down by the council, thus providing important peace of mind to the retired generation.

To understand more about how Stonehaven’s range of lifetime mortgage products can benefit you in retirement, please check the following links -